Here’s how VCs should size up first-time vs. repeat founders

“Been there, done that.”

Recent data suggests that second-time or seasoned entrepreneurs raise substantially more funding than new founders. At first glance, it seems like a sensible practice.

The venture capital model relies on finding a handful of breakout success stories, after all, so experienced founders seem like the obvious choice. But are they more likely to succeed than first-timers?

Here’s my take as someone who has invested in more than 100 startups, many of them established by newcomers: not necessarily.

Image credit: Made by Tech in Asia using Midjourney

Instead of categorically assuming experience makes founders better, investors tend to have different considerations when evaluating newbies and repeaters. Let’s dive in.

Assessing first-time founders

1. Character and integrity

New founders often operate in unfamiliar territory.

Raising significant capital brings excitement, but getting sudden access to millions of dollars can lead to mismanagement and ethical lapses. Combined with first-timers’ high aspirations and the pressure to grow rapidly, this creates a breeding ground for fraud.

See also: F is for fake: investors on why founders cry Ivy League

While character and integrity are not exclusive to experienced founders, investors should pay extra attention to a first-timer’s ability to handle large sums of money as well as their transparency in discussing previous mistakes and lessons learned. Reference checks with former colleagues could also show a founder’s character.

2. “Helicopter” skills

Establishing an early-stage startup involves juggling multiple tasks that range from product development and marketing to operations management. It is common for first-time founders to be overwhelmed by a never-ending to-do list.

The ability to be a “helicopter” is a crucial attribute that I look for in founders. Can they step back and see the 10,000-foot view of the company’s strategy and market environment while still zooming in on the details?

Evaluating experienced founders

Different strokes